New Cars to Hit Indonesian Roads

Southeast Asia Real Time has its spotlight on Indonesia this week, as part of the WSJ’s launch of its Bahasa Indonesia site. More onWSJ.com/Indonesia

Global car manufacturers are competing to get a bigger slice of Indonesia’s growing auto market with a number of new—and often smaller—models.

Bloomberg News

An attendee looks at a Mitsubishi Mirage during the Indonesia International Motor Show in Jakarta on Sept. 20.

Sub-compact hatchbacks were highlighted at the recent Indonesian International Motor Show, with manufacturers such as Toyota Motor Corp.Mitsubishi MotorsSuzuki Motor Corp. and Daihatsu Motor Co. introducing new models. Their goal is to tap into the price-sensitive market for sub-compacts in a country where a growing middle class is demanding more affordable and more efficient cars.

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Auto makers are also offering new features—including cars that can help their drivers parallel park with a touch of the button or which include devices that can zap bacteria and viruses inside.

Of course, big, gas-guzzling SUVs and trucks are still popular in Indonesia, as are multi-purpose vehicles such as the locally built Toyota Innova. But worsening traffic congestion, especially in the capital of Jakarta, has prompted some consumers to opt for smaller cars.

The government is also mulling new regulations to encourage lower-cost “green” cars to promote fuel efficiency and control subsidized fuel consumption in the country. Among other things, the government is considering lowering a luxury tax on such cars from between 10% and 50% currently.

The result is that competition in the sub-compact market is heating up. The segment is dominated by Japanese manufacturers and Korean rivals such as Hyundai Motor Company and Kia Motors. But U.S. car maker Ford Motor Co. has also managed to grab a significant slice of the market with its Ford Fiesta hatchback, selling 10,000 units within the first year of the car’s debut in 2011. Other car makers are looking to make their own marks.

Analysts estimate annual car sales in Indonesia will soon hit one million units, after surging to a record of 894,180 in 2011. With the level of car ownership still low in the archipelago—there are only about 11 million cars in a country of 240 million people—experts also believe annual sales will rise to three million units per year in the next decade.

Toyota and subsidiary Daihatsu are among the car makers that showcased sub-compact options at the latest car show—notably their jointly developed Astra Toyota Agya and the virtually identical Astra Daihatsu Ayla, which will cost between 75 million rupiah and 105 million rupiah (between $7,800 and $10,900) when they hit the market early next year.

The one-liter, three-cylinder Agya and Ayla, produced by Astra Daihatsu Motor’s new plant in Karawang, Indonesia, are designed to be among the cheapest cars in their class because more than 80% of the components are made locally, the companies said.

Daihatsu said the cars are fuel-efficient and feature a display system that provides detailed information on fuel consumption. These models follow the success of previous joint projects between Toyota and Daihatsu, like the popular multi-purpose vehicle Avanza/Xenia and the compact SUV Rush/Terios.

Meanwhile, after years absent from the sub-compact category in Indonesia, Mitsubishi also unveiled its much-anticipated Mirage hatchback at the auto show. Mitsubishi’s distributor in Indonesia, PT Krama Yudha Tiga Berlian, said the Mirage, which is assembled in Thailand, was priced at between 139 million rupiah and 165 million rupiah. The car features a 1.2-liter, three-cylinder engine, and more expensive variations include a continuously variable transmission, which can enable the engine to run more efficiently, saving gas.

Another Japanese car maker, Suzuki, introduced a new version of its popular Swift, which is positioned to compete in a segment that also includes the new Honda Jazz, the Toyota Yaris, the Mazda2, the Fiesta and the Hyundai Grand Avega hatchback (known in the U.S. as the New Accent). The sporty-looking Swift features a 1.4-liter engine and is priced at between 163 million rupiah and 180 million rupiah.

Suzuki boasts that the second-generation Swift is more eco-friendly and fuel-efficient while offering more dynamic handling. The car comes with a five-speed manual transmission that Suzuki says adopts a new mechanism that reduces driving effort or a four-speed automatic transmission.

Despite an announcement by the Japanese car maker that the car would make its first appearance at the 2012 Paris Auto Show, the face-lifted 2013 Honda CR-Z made a surprise debut at the Jakarta motor show. The CR-Z has a 1.5-liter, four-cylinder engine and comes with a six-speed manual transmission or a CVT automatic transmission. Although displayed at the auto show, the car is not on sale yet in Indonesia; Honda is taking pre-orders with delivery expected in February.

Mazda Motor Indonesia has another addition to its lineup with the introduction of the Biante. The eight-seat multi-purpose vehicle features a button that opens and closes a rear passenger sliding door automatically and a Panasonic Nanoe ion generator to neutralize bacteria and viruses.

India’s Tata Motors is also making waves in Indonesia as it becomes the latest auto maker to expand in the market. Tata, which launched its Indonesian subsidiary Sept. 11, displayed 13 passenger and commercial vehicles at the Jakarta show, including the world’s cheapest car, the Nano. The car retails for about $2,800 in India, though Tata has declined to disclose the cost when it begins selling it in Indonesia next year after establishing a network of dealers and service centers, said Pankaj Jain, Tata’s senior general manager for distribution.

“The market is very promising and that’s why we’re coming here. We want to be here for the long haul,” he said.

U.S. car maker General Motors says it also has something in store for Indonesians, who are known for their love of people movers: a locally made Chevrolet Spin multi-purpose vehicle. The seven-seater Spin will be assembled at GM’s new manufacturing facility in Bekasi, an industrial town east of Jakarta, and is expected to hit the Indonesian market next year.

Meanwhile, rival U.S. giant Ford allowed visitors to test new safety features in its compact Focus, known as Active City Stop and Active Park Assist. Active City Stop uses sensors to monitor the road ahead for stationary traffic and stop the car when necessary to prevent a crash.

Using ultrasonic-based sensing systems and electric power-assisted steering to guide the vehicle into a parking spot, Active Park Assist helps drivers parallel park with the touch of a button and without ever touching the steering wheel.

Hyundai introduced a new Sonata sedan and the latest edition of its Santa Fe sports-utility vehicle, while Kia unveiled a new Sorento SUV and the Rio sedan.

The new 2.4-liter Sonata features an engine-start button, a 3-D onboard computer, and a six-speed shiftronic automatic transmission. The third-generation Santa Fe comes with a 2.2-liter common rail diesel engine and features a panoramic sunroof that stretches to the second-row seats and a six-speed shiftronic transmission.

Major European brands also made their presence known at the annual show.

BMW Indonesia launched two new sedan models, the BMW 740Li and BMW M6 Coupe. BMW said its new vehicles feature EfficientDynamics, a technology that increases fuel efficiency.

Some BMWs are also equipped with so-called ConnectedDrive technology, which combines features from mobile applications, driver-assistance programs, call center services and real-time traffic information to help make driving easier.

Germany’s Volkswagen is offering its latest models of the Polo and Golf hatchbacks as well as the Touran multi-purpose vehicle, while French auto giant Peugeot exhibited a new lineup that included the 208 hatchback, the 408 sedan and the Peugeot RCZ sports car.

About Southeast Asia Real Time

Indonesia Real Time provides analysis and insight into the region, which includes Singapore, Thailand, Indonesia, Vietnam, Malaysia, the Philippines, Myanmar, Cambodia, Laos and Brunei. Contact the editors at SEAsia@wsj.com.

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